WTO ruling to have minimal effect on farm program

SAN ANTONIO - The recent World Trade Organization ruling upholding Brazil’s claim that the United States cotton program distorts trade and is unfair to developing nations likely will not convince the U.S. Congress to remove the safety net farmers depend on when world markets and other nations’ trade policies conspire against them.

“The cotton program will remain in operation,” said Neal Gillen, executive vice president and general counsel of American Cotton Shippers Association, in an address to last week’s Texas Cotton Association annual meeting in San Antonio.

Even if the ruling is upheld following what is likely to be a lengthy appeals process, Congress is not mandated to make changes in the U.S. farm program. And changes are not likely until 2006, Gillen said.

He said one of the worst effects of the WTO ruling comes as ammunition provided to U.S. critics of the program.

“Senator Grassley and the media will use it,” he said. “Both the liberal media and now the conservative media have attacked the farm program. Holding onto the 2002 farm bill is one of the battles we have to fight.”

He said the United States has options if the appeals process doesn’t at least come up with a reasonable compromise. “We can pay damages or we can totally ignore it,” he said.

Ignoring the judgment gives Brazil the right to impose trade sanctions on U.S. goods, including cotton. “But Brazil’s tariffs are already so high we can’t penetrate the market anyway.”

Gillen said the Doha Round of WTO talks should reconvene. “Nothing has happened since the large group of developing countries walked out at Cancun. Those countries achieved nothing. They wanted developed nations to give up subsidies but were not willing to give up control of access to their markets. Their tariffs remain high.”

Gillen said when the next round convenes, the European Union will determine what happens.

“I think we may see a phase-down of subsidies over the next 10 to 15 years. But even with that, the United States is not going to give up its farm safety net. Agriculture is important in virtually every state, so politicians will listen to agricultural interests.”

Gillen said the current farm program likely will remain intact through 2004 and 2005. “It may be up for debate again in 2006 or 2007. It’s currently set to run through 2008.”

Effective ag policy may become more difficult to maintain, however.

“We’re in a difficult year of transition,” he said. “Congressman Larry Combest resigned last year, and the Republicans are trying to retire Charlie Stenholm. That’s a lot of experience lost.

“With Combest gone and Stenholm targeted, who will be our champion? We don’t know.”

Gillen said the coalition of farm organizations formed to ward off previous attacks on agricultural programs continues to seek ways to maintain a safety net. “We’ll keep that organization going to preserve the farm bill,” he said. “It’s a good coalition of 75 or 80 farm organizations, and it has worked.”

Gillen said the farm program warrants saving. “It works and agriculture needs it.”

He said the other key issue for 2004 will be the election, and he made some predictions.

“I think the U.S. House of Representatives will remain in Republican control,” he said. “Texas redistricting could give Republicans another six seats.”

That gain will be offset somewhat by Democrat gains in Kentucky and New York but large gains by Democrats likely will be thwarted by a “structural issue.

“Following the 2000 census, incumbents took care of themselves. Only 36 seats will be competitive, 18 for each party. The Democrats would have to win all 18 of their competitive seats plus 12 of the Republicans’ to regain the House. That’s almost impossible, and I don’t see it happening.”

He thinks the Republicans will gain one seat in the Senate. “They could pick up three. It will be hard for the Republican Party to hold seats in Arizona and New Mexico but they have good shots at open Democratic seats in Florida, Georgia, North Carolina, and South Carolina.”

The presidential election, Gillen said, will be close, again. “The White House did not expect John Kerry to get the nomination and they did not expect him to come out swinging. Consequently, President Bush can’t sit on his huge war chest until summer. He had to start spending early.”

Gillen said campaigning will be heavy in 15 “battleground states,” mostly in the Midwest. Unemployment, taxation, gun control, and reproductive rights likely will be key issues.

He said candidates will spend little money in Texas. “It’s foolish for either candidate to spend money here,” he said. “They’ll go to New Mexico. Republicans will not spend heavily in New York or California.”

Gillen said the election “is a tossup.”

He also said Republican attempts to label Kerry as a tax and spend liberal could backfire. “The current deficit was run up by a Republican administration and a Republican Congress.

“These are unusual political times. The country is polarized and polls indicate that two-thirds of the electorate already have made up their minds about which presidential candidate they’ll vote for. Candidates will battle for the one-third undecided.

“This election will be decided by the uncertainty of the economy, although it seems to be improving, and the Iraq war and terrorism.”

Gillen said Texans face a tough choice, “especially Republicans. You need to support people like Charlie Stenholm.”